ISLAMABAD – Pakistanis have watched petrol prices going up and down amid tweaks in global market. Now, that daily rollercoaster could be coming to an end.
Petroleum dealers have urged the government to bring back the old weekly or fortnightly pricing system, but with dealers’ margins also increasing, the next fuel price decision could carry a fresh shock for consumers.
Pakistan Petroleum Dealers Association sent fresh proposal to PM Shehbaz Sharif, calling for an end to the current system of determining petrol and diesel prices on a daily basis. The demand comes as the association argues that the situation in the international oil market has relatively stabilised following a decline in tensions linked to the Middle East conflict.
Dealers say there is little justification for continuing with daily price adjustments when global petroleum prices are no longer experiencing the same level of volatility. Instead, they want the government to review international prices at fixed intervals and revise domestic fuel rates every seven or 15 days.
The proposal was revealed by Pakistan Petroleum Dealers Association Chairman Malik Khuda Bakhsh during an emergency press conference in Karachi. He said the association had formally approached the Prime Minister with a proposal aimed at bringing back a more predictable petroleum pricing mechanism.
Under the proposed system, international petroleum prices would be assessed after a fixed period, with domestic petrol and diesel prices subsequently adjusted on the basis of the global market situation.
The call for a change in the pricing mechanism comes alongside another development that could directly affect consumers.
Economic Coordination Committee (ECC), chaired by Finance Minister Muhammad Aurangzeb, has approved an increase in the margins paid to petrol and high-speed diesel dealers. According to media reports, the dealers’ margin will rise by Rs1.34 per litre, taking it from Rs8.64 to Rs9.98 per litre for both petrol and diesel. The overall increase in dealers’ margins amounts to Rs15.51, according to reports.
The developments have put Pakistan’s fuel pricing mechanism at a critical juncture. On one side, the government has before it a proposal to end daily revisions and return to a seven- or 15-day pricing cycle. On the other, the approved increase in dealers’ margins could add to the cost of petrol and diesel.
Instead of reacting to every minor movement in international oil prices, the government would revise domestic fuel prices at predetermined intervals.
For consumers, the change could mean fewer daily price shocks and greater predictability, although the actual impact on the price paid at the pump would ultimately depend on international oil prices, the exchange rate and other components of the petroleum pricing formula.
The coming decision by the government could therefore determine whether Pakistan continues with its highly responsive daily fuel-pricing model or returns to a system in which motorists get a relatively stable price for several days before the next revision.
Petrol prices in Pakistan to remain unchanged until August 17
